22.
Eight days later, on June 4, 2016, Yan applied to open the Wu Account. The
application purported to be from Wu and included what purported to be her signature, but the
email address listed on the application was Yan’s. Yan funded the Wu Account with transfers
from his own bank account in the United States, and he controlled all the securities trading in the
Wu Account.
23.
The Steinhoff-Mattress Firm negotiations continued in June 2016. On June 16,
the companies executed an exclusivity agreement, which had been negotiated by Law Firm A
and Mattress Firm’s counsel in the preceding days.
24.
On June 24, 2016, Yan purchased 100 shares of Mattress Firm stock at $33.35 per
share in the Wu Account. Yan and Attorney A spoke by phone nearly every day, and often
several times a day, between early March and June 24, 2016, including four times on June 24
before Yan placed his purchase order for Mattress Firm stock.
Case 1:17-cv-05257 Document 1 Filed 07/12/17 Page 6 of 15
7
25.
On June 25, 2016, Attorney A traveled from to New York to China, and Yan
joined her there on July 12, 2016. Yan and Attorney A’s wedding celebration took place during
this trip to China.
26.
On July 25, 2016, while overseas, Yan purchased an additional 70 shares of
Mattress Firm stock at $30.20 per share in the Wu Account.
27.
The next day, July 26, 2016, Yan purchased an additional 130 shares of Mattress
Firm stock at $30.15 per share in the Wu Account.
28.
Yan purchased Mattress Firm stock between June 24 and July 26, 2016, while in
possession of, and on the basis of, material nonpublic information about Steinhoff’s acquisition
of Mattress Firm that he had obtained from Attorney A.
29.
Yan also purchased Mattress Firm stock with knowledge or reason to know that
the information he had relating to the Steinhoff tender offer for Mattress Firm was nonpublic,
and that it was acquired directly or indirectly from an advisor to the offering company or the
target.
30.
On Sunday, August 7, 2016, at 12:01 a.m., Mattress Firm and Steinhoff
announced that Steinhoff would acquire Mattress Firm for $64 per share. When the market
opened on August 8, Mattress Firm’s stock price increased by $33.95, and it closed that day at
$63.75 per share, a 114% increase from the closing price on the previous trading day. The
trading volume in Mattress Firm stock increased by 8,112,189 shares to 8,293,144 shares, a
4,483% increase compared to the trading volume on the previous trading day.
31.
At 11:22 a.m. on August 8, 2016, Yan sold all 300 shares of the Mattress Firm
stock that he had purchased in June and July at $63.65 per share, for a profit of approximately
$9,726, or $32.42 per share.
Case 1:17-cv-05257 Document 1 Filed 07/12/17 Page 7 of 15
8
B.
Yan’s Trading in Stillwater Options Before the Sibanye Acquisition Announcement
32.
Sibanye initially expressed its interest in acquiring Stillwater in March 2016, and
in July 2016, Sibanye submitted a preliminary non-binding indication of interest to acquire
Stillwater. In or about late August 2016, Attorney A learned of Sibanye’s negotiations with
Stillwater through her position as an associate at Law Firm A, which was representing Sibanye in
the negotiations.
33.
On September 12, 2016, Yan completed an application to trade options in the Wu
Account.
34.
In October 2016, Sibanye continued to negotiate a possible acquisition of
Stillwater and Stillwater’s financial advisor also contacted several other potential transaction
counterparties, all of which ultimately decided not to pursue a transaction with Stillwater.
35.
In November 2016, the negotiations between Stillwater and Sibanye were at an
advanced stage, and Attorney A was working on the Sibanye-Stillwater matter almost every
business day, except during a vacation in Europe that she took in late November, as alleged
below.
36.
Between November 4 and 6, 2016, Yan visited Attorney A in New York.
37.
On November 7, 2016, upon returning to Cambridge, Yan visited the Yahoo!
Finance page concerning Stillwater. Over the next few days, Yan and Attorney A spoke on the
phone multiple times each day, as was typical for them.
38.
On November 12, 2016, Yan flew from Boston to Germany. The next day,
November 13, before information about the Stillwater-Sibanye transaction was publicly
available, Yan searched the internet for “stillwater merger” but did not locate any web pages on
this subject matter.
Case 1:17-cv-05257 Document 1 Filed 07/12/17 Page 8 of 15
9
39.
The next day, November 14, 2016, Law Firm A delivered a draft merger
agreement to Stillwater’s counsel.
40.
On or about November 22, 2016, Attorney A also flew to Europe.
41.
On November 22, 2016, Yan used the Wu Account to purchase 21 Stillwater call
options with a strike price of $15 at $0.85 per share, as well as 50 Stillwater call options with a
strike price of $16 at $0.38 per share.
1
All of these options were due to expire on December 16,
2016.
42.
On November 23, 2016, Yan purchased an additional 200 Stillwater call options
with a strike price of $15 and an expiration date of December 16, 2016 in the Wu Account.
43.
On November 28, 2016, Yan returned to Cambridge, and Attorney A returned to
New York. Attorney A resumed her work on the Sibanye-Stillwater transaction the next day,
and she continued to work on it every business day between then and the announcement of the
deal on December 9, 2016. As was typical for them, Yan and Attorney A spoke by phone daily,
and sometimes multiple times per day, between their return to the United States on November 28
and the announcement of the Sibanye-Stillwater transaction on December 9.
44.
On December 1, 2016, Yan purchased an additional 100 Stillwater call options
with a strike price of $16 and an expiration date of December 16, 2016 in the Wu Account, at
$0.20 per share. On the same day, representatives of Sibanye, Stillwater, and their respective
legal counsel and financial advisors convened in New York to discuss the key terms of the
transaction.
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